EX-99.1 3 pressrelease.htm EVEREST RE GROUP, LTD. PRESS RELEASE

NEWS RELEASE

_____________________________________

 EVEREST RE GROUP, LTD.
c/o ABG Financial & Management Services, Inc.
Parker House, Wildey Business Park, Wildey Road, St. Michael, Barbados

Contact:
Elizabeth B. Farrell
Vice President, Investor Relations
Everest Global Services, Inc.
908.604.3169

For Immediate Release

Everest Re Group Announces Fourth Quarter Earnings

    ST.  MICHAEL, Barbados – February 2, 2004 — Everest Re Group, Ltd. (NYSE: RE) reported fourth quarter 2003 after-tax operating income1, which excludes realized capital gains and losses, of $118.6 million, or $2.09 per diluted share, a 95.9% increase compared to $60.6 million, or $1.17 per diluted share, in the fourth quarter of 2002. Fourth quarter 2003 net income increased 119.2% to $121.8 million, or $2.15 per diluted share, compared to $55.6 million, or $1.08 per diluted share, in the fourth quarter of 2002. Operating income differs from net income only by the exclusion of realized gains and losses on investments.

        For the year ended December 31, 2003, after-tax operating income1, which excludes realized capital gains and losses, was $456.0 million, or $8.29 per diluted share, an increase of 73.6% compared to $262.8 million, or $5.14 per diluted share, in 2002. Net income was $426.0 million, or $7.74 per diluted share, an increase of 84.2% compared to $231.3 million, or $4.52 per diluted share, in 2002.

        Gross premiums written for the fourth quarter of 2003 were $1.26 billion, a 38.5% increase compared to $912.2 million in 2002. Net premiums written were $1.19 billion, an increase of 46.8% from $811.3 million for the fourth quarter of 2002. The Company’s GAAP combined ratio in the fourth quarter was 96.4% compared to 101.6% in 2002. Net investment income for the fourth quarter was $106.4 million compared to $87.8 million in the fourth quarter of 2002. Cash flow from operations for the fourth quarter of 2003 was $480.7 million, an increase of 71.0% from $281.2 million in the fourth quarter of 2002.

        For the year ended December 31, 2003, gross premiums written were $4.57 billion, a 60.7% increase from $2.85 billion in 2002. Net premiums written grew 63.6% to $4.32 billion from $2.64 billion in 2002. The GAAP combined ratio for 2003 was 95.2% compared to 99.0% in 2002. Net investment income for the year was $402.1 million, an increase of 14.7% from $350.6 million in 2002. Cash flow from operations for the year was $1.65 billion, compared to $736.1 million in 2002.

        At December 31, 2003, the Company’s shareholders’ equity was $3.16 billion, or $56.84 per outstanding share. The change in book value per share reflects a 33.6% increase in shareholders’ equity from $2.37 billion, or $46.55 per outstanding share, at December 31, 2002.

        Commenting on the Company’s results, Chairman and Chief Executive Officer Joseph V. Taranto said, “The Company’s 2003 results were excellent as our financial security, broad product expertise and market leadership reinforced our position as a reinsurer of choice. As we enter 2004, those same strengths should allow us to continue to deliver superior results for our shareholders.”

        The Company also reaffirmed its estimate of 2004 operating earnings at $10.00 — $11.00 per share, absent any unusual losses or market developments.

        This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. federal securities laws. In particular, our forecasts of future earnings are forward looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market fluctuations, trends in insured and paid losses, catastrophes, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

        Everest Re Group, Ltd. is a Bermuda holding company that operates through the following subsidiaries: Everest Reinsurance Company provides reinsurance to property and casualty insurers in both the U.S. and international markets. Everest Reinsurance (Bermuda), Ltd. provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the United States. Everest Indemnity Insurance Company offers excess and surplus lines insurance in the United States. Additional information on Everest Re Group companies can be found at the Group’s web site at www.everestre.com.

        A conference call discussing the fourth quarter results will be held at 8:30 a.m. Eastern Standard Time on February 3, 2004. The call will be available on the Internet through the Company’s web site or at www.streetevents.com.

        Anyone receiving this release by wire or through the Internet may visit the Company’s web site to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestre.com in the “Financials/Financial Reports” section. The supplemental financial information may also be obtained by contacting the Company directly.

_________________

1 The Company generally uses operating income, a non-GAAP financial measure to evaluate its performance. After-tax operating income consists of net income excluding after-tax realized gains (losses). Although realized capital gains (losses) are an integral part of the Company’s insurance operations, the determination of realized capital gains (losses) is independent of the insurance underwriting process. The Company believes that the level of realized gains (losses) for any particular period is not indicative of the performance of our underlying business in that particular period. Providing only a GAAP presentation of net income makes it more difficult for users of our financial information to evaluate the Company’s success or failure in our basic business, and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts, who follow the Company, focus on after-tax operating income in their analyses for the reasons discussed above. The Company provides after-tax operating income to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

— Financial Details Follow —

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in thousands, except per share amounts)

      Three Months Ended   Twelve Months Ended  
      December 31, December 31,  
 
 
      2003   2002   2003   2002  
    (unaudited)  
REVENUES:  
Premiums earned   $ 1,094,640   $ 724,539   $ 3,737,851   $ 2,273,677  
Net investment income    106,380    87,821    402,100    350,603  
Net realized capital gain (loss)    3,517    (7,500 )  (38,026 )  (50,043 )
Net derivative income (expense)    3,462    3,097  5,851    (14,509 )
Other income (expense)    4,991  (1,656 )  (1,033 )  (2,091 )
Total revenues    1,212,990    806,301    4,106,743    2,557,637  
CLAIMS AND EXPENSES:  
Incurred loss and loss adjustment expenses    763,429    531,617    2,600,196    1,629,382  
Commission, brokerage, taxes and fees    264,171    182,502    863,933    551,787  
Other underwriting expenses    27,906    21,768    94,623    69,916  
Distributions related to trust preferred securities    4,121    2,091    16,485    2,091  
Interest expense on senior notes    9,734    9,730    38,931    38,916  
Interest expense on credit facility    327    773    1,362    3,501  
Total claims and expenses    1,069,688    748,481    3,615,530    2,295,593  
 
INCOME BEFORE TAXES    143,302    57,820    491,213    262,044  
 
Income tax expense    21,522    2,255    65,185    30,741  
 
NET INCOME   $ 121,780   $ 55,565   $ 426,028   $ 231,303  
 
Other comprehensive income, net of tax    12,991  18,742    58,535    107,662  
 
COMPREHENSIVE INCOME   $ 134,771 $ 74,307   $ 484,563   $ 338,965  
 
PER SHARE DATA:  
   Average shares outstanding (000's)    55,566    50,879    54,023    50,325  
   Net income per common share - basic   $ 2.19   $ 1.09   $ 7.89   $ 4.60  
 
   Average diluted shares outstanding (000's)    56,763    51,628    55,010    51,139  
   Net income per common share - diluted   $ 2.15   $ 1.08   $ 7.74   $ 4.52  
  

EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value per share)



    December 31, December 31,  
        2003     2002  
ASSETS:    
Fixed maturities - available for sale, at market value  
  (amortized cost: 2003, $8,357,723; 2002, $6,460,839)   $ 8,726,886   $ 6,779,858  
Equity securities, at market value (cost: 2003, $139,911 ; 2002,    $56,841)    147,885    47,473  
Short-term investments    151,853    169,116  
Other invested assets (cost: 2003, $102,742; 2002, $53,887)    103,359    53,856  
Cash    184,859    208,830  
          Total investments and cash    9,314,842    7,259,133  
 
Accrued investment income    113,926    85,959  
Premiums receivable    1,047,856    673,377  
Reinsurance receivables    1,284,139    1,116,362  
Funds held by reinsureds    157,364    121,308  
Deferred acquisition costs    333,214    207,416  
Prepaid reinsurance premiums    98,384    63,437  
Deferred tax asset    145,271    139,176  
Other assets    187,981    198,435  
TOTAL ASSETS   $ 12,682,977   $ 9,864,603  
LIABILITIES:  
Reserve for losses and adjustment expenses   $ 6,361,245   $ 4,905,582  
Future policy benefit reserve    205,275    227,925  
Unearned premium reserve    1,499,640    872,340  
Funds held under reinsurance treaties    385,768    347,360  
Losses in the course of payment    11,133    45,511  
Contingent commissions    2,135    1,932  
Other net payable to reinsurers    46,037    61,244  
Current federal income taxes    41,308    (16,696 )
8.5% Senior notes due 3/15/2005    249,874    249,780  
8.75% Senior notes due 3/15/2010    199,245    199,158  
Revolving credit agreement borrowings    70,000    70,000  
Company-obligated mandatorily redeemable preferred securities  
  of subsidiary trusts holding solely subordinated debentures   
  ("trust preferred securities")    210,000    210,000  
Accrued interest on debt and borrowings    13,362    13,481  
Other liabilities    222,785    308,340  
          Total liabilities    9,518,077    7,495,957  
SHAREHOLDERS' EQUITY:  
Preferred shares, par value: $0.01; 50 million shares authorized;  
      no shares issued and outstanding    --    --  
Common shares, par value: $0.01; 200 million shares authorized;  
     55.7 million shares issued in 2003 and 50.9 million shares  
      issued in 2002    561    513  
Additional paid-in capital    954,658    618,521  
Unearned compensation    (5,257 )  (340 )
Accumulated other comprehensive income, net of  
  deferred income taxes of $117.5 million in 2003 and  
  $74.4 million in 2002    280,077    221,542  
Retained earnings    1,957,811    1,551,360  
Treasury shares, at cost; 0.5 million shares in 2003 and 0.5 million  
  shares in 2002    (22,950 )  (22,950 )
          Total shareholders' equity    3,164,900    2,368,646  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 12,682,977   $ 9,864,603  


EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)



    Three Months Ended Twelve Months Ended      
   December 31,   December 31,        
   2003   2002   2003   2002  
   (unaudited)            
 
CASH FLOWS FROM OPERATING ACTIVITIES:   $    480,658   $    281,150   $    1,653,805   $    736,128  
  
CASH FLOWS FROM INVESTING ACTIVITIES:  
Proceeds from investments sold  386,103  779,995   1,231,177   2,159,044  
Proceeds from investments maturing or called  207,411  185,202   875,575   663,088  
Cost of investments acquired   (1,303,777) (1,543,969) (4,144,191) (3,911,607)    
Net (purchases) sales of short-term investments  244,530  219,172   20,479   (18,100 )  
Net cash used in investing activities  (465,733 ) (359,600 ) (2,016,960 ) (1,107,575 )
CASH FLOWS FROM FINANCING ACTIVITIES: 
Common shares issued during the period  7,781   541   330,885   348,626  
Dividends paid to shareholders  (5,010 ) (4,071 ) (19,577 ) (16,347 )
Purchase of treasury stock  --   --   -- (22,895 )
Proceeds from trust preferred securities  --   210,000   --   210,000  
Borrowings on revolving credit agreement  --   --   --   45,000  
Repayments on revolving credit agreement  --   (55,000 ) --   (80,000 )
Net cash provided by financing activities  2,771  151,470   311,308   484,384  
EFFECT OF EXCHANGE RATE CHANGES ON CASH  25,526   15,584   27,876   24,015  
Net increase (decrease) in cash  43,222   88,604   (23,971 ) 136,952  
 
 Cash, beginning of period  141,637   120,226   208,830   71,878  
Cash, end of period  $    184,859   $   208,830   $    184,859   $      208,830